LAD - Lithia Motors on watch after Morgan Stanley turns negative with ratings cut

Morgan Stanley downgrades Lithia Motors (LAD) to an Underweight rating from Equal-weight after the excitement over the auto retailer's Q4 and growth strategy stoked a share price rally. Analyst Adam Jonas: "We think the stock’s re-rating to nearly ~20x PE is largely deserved, but the 17%downside to our revised $310 target and unfavorable bull-bear skew (6% upside to bull, 58% downside to bear) drive the recommendation change to UW. LAD is a strong executor and conveys a very compelling strategy around leveraging digital/omnichannel (Driveway) as well executing a synergistic M&A strategy. However, at this time at least, we feel that investors can gain access to similar  themes at more attractive valuations from ABG, GPI, PAG and KMX (each rated OW) or even from CVNA." MS assigns a price target of $310 to LAD vs. the average Wall Street PT of $362.58.

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Lithia Motors on watch after Morgan Stanley turns negative with ratings cut